Attorney General Jepsen Provides Testimony in Support of Revising the Uniform Fraudulent Transfer Act

HARTFORD – Attorney General George Jepsen today provided testimony to the legislature’s Judiciary Committee in support of Senate Bill 1021, An Act Revising the Uniform Fraudulent Transfer Act, legislation that aims to prevent bankruptcy courts from ordering colleges and universities to pay back money parents or guardians had paid to send their children to college.

The proposed legislation is in response to dozens of cases brought by Chapter 7 bankruptcy trustees throughout Connecticut and the United States, in which bankruptcy trustees have used the current state fraudulent transfer laws to require colleges and universities to pay back to bankruptcy estates the amount a parent or guardian paid for their child’s education.

This has had an adverse financial impact on both public and private colleges and universities. It also has created problems for students who have been faced with paying back the money recovered by bankruptcy trustees to obtain their degree and transcripts.

“I believe that, as a matter of policy, the state should exempt from our state fraudulent transfer laws payments made and obligations incurred by a parent or guardian to a college or university in furtherance of a child’s undergraduate education,” stated Attorney General Jepsen in his written testimony. “Even though a parent or guardian may not technically have a legal obligation to make such payments, parents and guardians unquestionably receive value for their children’s college education. Our state laws should recognize that value – not create legal or financial disincentives for parents or guardians. State law also should not impose additional financial burdens on students whose parents made payments on their behalf.”

Please click here to read the Attorney General’s entire written testimony to the Judiciary Committee.